• The yellow-metal remains pressured ahead of the Federal Reserve May meeting.
  • A downbeat market mood, courtesy of China’s Covid-19 struggling and weak PMIs reported, threatens to derail the world’s second-largest economy.
  • Gold Price Forecast (XAU/USD): Neutral biased, though a daily close below the 100-DMA might put the 200-DMA in play.

Update: Gold spot (XAU/USD) is down some 1.8% at the time of writing on a day where the US dollar bounced back to life and US 10-year yields breached 3% for the first time since 2018. The bears are all over the currency space as investors get set for a hawkish outcome at the Federal Reserve meeting this week. 

The potential for the US central bank to adopt an even more hawkish tone than many expect is underpinning the greenback at the start of the week. The Fed is expected to hike rates 50 bp to 1.0% Wednesday. While there will be no new forecasts until the June 14-15 FOMC meeting, another 50 bp hike is widely expected then also. In fact, as analysts at Brown Brothers Harriman note, WIRP suggests nearly 50% odds of a 75 bp hike then. 

''Looking further out,'' the analysts said, ''the swaps market is now pricing in 300 bp of tightening over the next 12 months that would see the Fed Funds rate peak near 3.5%. Because of the media blackout, there are no Fed speakers until Chair Jerome Powell’s post-decision press conference Wednesday afternoon.''

Risk-aversion ahead of the Fed meeting boosts the greenback

The market sentiment remains dampened as the US central bank takes center stage in a busy week in the US economic docket. Alongside the Fed's May meeting, the US ISM Manufacturing PMI for April was released earlier as Wall Street opened, with the reading showing that manufacturing slowed to its lowest level in 21 months. The reading came at 55.4, missing expectations and lower than March’s 57.1.

Regarding the report, the ISM Manufacturing Business Survey Committee chair Timothy Fiore said new coronavirus outbreaks overseas were “creating a near-term headwind for the US manufacturing community,” noting that some manufacturers worried “about their Asian partners’ ability to deliver reliably in the summer months.”

In the meantime, US Treasury yields are skyrocketing during the day. The US 30-year broke the 3% threshold, while the barometer for US Treasury yields, the 10-year benchmark note, surges five and a half basis points, sitting at 2.998%. That, alongside overall greenback strength, as shown by the US Dollar Index up 0.42%, at 103.649, weighed on the non-yielding metal.

Factors alongside the busy US economic docket featuring ADP and US Nonfarm Payrolls employment reports remain in the backdrop. China keeps struggling to tackle the recent coronavirus flare-up that struck Shanghai and has already spread to Beijing. Restrictions could be re-established in Shanghai, while Beijing tested millions of people on a May Day holiday, as reported by Reuters. It’s worth noting that Caixin Manufacturing and Services PMIs, plunged below expectations.

Gold Price Forecast (XAU/USD): Technical outlook

The XAU/USD’s daily chart depicts the yellow metal as neutral biased. At the time of writing, gold is trading below the 100-day moving average (DMA) at $1879.51, a level that, if it gives way to XAU/USD bears to record a daily close below it, could open the door for a drop towards the 200-DMA around $1834.45.

On the downside, gold’s first support would be the 200-DMA at $1834.45. Break below would expose an upslope trendline around $1810-15, followed by a renewed test of $1800.

Upwards, XAU/USD’s first resistance would be the 100-DMA at $1879.51. A breach of the latter would expose $1890, followed by $1900, and then April’s 29 daily high at $1919.77.

XAU/USD

Overview
Today last price 1865.91
Today Daily Change -31.36
Today Daily Change % -1.65
Today daily open 1896.87
 
Trends
Daily SMA20 1935.45
Daily SMA50 1938.09
Daily SMA100 1877.14
Daily SMA200 1833.7
 
Levels
Previous Daily High 1920.02
Previous Daily Low 1892.62
Previous Weekly High 1934.44
Previous Weekly Low 1872.24
Previous Monthly High 1998.43
Previous Monthly Low 1872.24
Daily Fibonacci 38.2% 1909.55
Daily Fibonacci 61.8% 1903.09
Daily Pivot Point S1 1886.32
Daily Pivot Point S2 1875.77
Daily Pivot Point S3 1858.92
Daily Pivot Point R1 1913.72
Daily Pivot Point R2 1930.57
Daily Pivot Point R3 1941.12

 

 

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

GBP/USD extends recovery gains to near 1.3250, as BoE looms

GBP/USD extends recovery gains to near 1.3250, as BoE looms

GBP/USD extends the recovery to near 1.3200 in European trading on Thursday, having found buyers near 1.3150. A fresh US Dollar pullback and a rebound in risk sentiment offer support to the pair ahead of the BoE policy announcements. 

GBP/USD News
EUR/USD advances to 1.1150, focus shifts to ECB-speak

EUR/USD advances to 1.1150, focus shifts to ECB-speak

EUR/USD is well-bid near 1.1150 in the European session on Thursday. The pair is underpinned by the renewed US Dollar retreat and an upbeat mood. Traders digest the Fed's dovish outlook, bracing for ECB-speak for fresh trading incentives. US data are also eyed. 

EUR/USD News
Gold price jumps back closer to all-time peak, $2,600 remains in sight amid fresh USD weakness

Gold price jumps back closer to all-time peak, $2,600 remains in sight amid fresh USD weakness

Gold price regains positive traction following the previous day's pullback from the all-time peak and builds on its steady intraday ascent heading into the European session on Thursday. 

Gold News
BoE expected to keep interest rate unchanged at 5% as price pressures persist

BoE expected to keep interest rate unchanged at 5% as price pressures persist

After a close call in August, the Bank of England’s September interest rate decision is keenly awaited for fresh cues on the bank’s future policy action and the pace of its bond sales.

Read more
Bitcoin surges to $62,000 mark after 50 bps Fed rate cut

Bitcoin surges to $62,000 mark after 50 bps Fed rate cut

Bitcoin and Ripple eye for a rally as they break and find support around their resistance barrier. Meanwhile, Ethereum demonstrates signs of recovery as it approaches a critical resistance level, indicating that an upward rally could be on the horizon if it successfully breaks through.

Read more
Moneta Markets review 2024: All you need to know

Moneta Markets review 2024: All you need to know

VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.

Read More

Forex MAJORS

Cryptocurrencies

Signatures